Agreement Beneficiary Has

• Category: Trusts - Minors
• State: Multi-State
• Control #: US-0976BG
• Format: Word; Rich Text

Description

Gifts in trust to minors are quite common, both as a means of building up a child's estate and as a way to minimize federal gift, income, and estate taxes payable by the trustor or the trustor's estate. A carefully drafted minor's trust can provide competent management of the property on the minor's behalf, while avoiding any problem of the minor's disability to act with respect to that property. Such a trust can effect substantial tax savings for the trustor-donor while regulating distribution of the trust income and principal in keeping with the needs of the minor. A section 2503(c) Minor's Trust is a separate legal entity (a trust) established to hold gifts in trust for a child until the child reaches age 21. The trust is named after the section of the Internal Revenue Code upon which it is based. Normally, for a gift to qualify for the annual gift tax exclusion, it must be a gift of a present interest. This means the recipient must be able to use the gift immediately. A gift of a future interest in some property (e.g., the right to the money when the child turns 21) would not normally qualify, except for section 2503(c) of the Internal Revenue Code. Section 2503(c) sets out the conditions under which a gift of a future interest to a minor qualifies for the gift tax exclusion. A Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion; Beneficiary has Right to Terminate Trust at Age 21 is a legal document that sets out the terms of an irrevocable trust for a minor child. This type of trust allows the parent or guardian to make gifts to the minor up to the annual gift-tax exclusion limit without the gift being subject to gift taxes. The trust also allows the beneficiary to terminate the trust at age 21. The Trust Agreement will typically include the following elements: • Details of the trust, such as the name, purpose, and duration; • The identity of thsettleror (the person creating the trust) and the trustee (the person responsible for managing the trust); • The beneficiaries of the trust; • The trust property; • The terms of the annual gift-tax exclusion; • The terms of the beneficiary's right to terminate the trust at age 21; and • The terms of any distributions from the trust. There are two main types of Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion; Beneficiary has Right to Terminate Trust at Age 21: • Testamentary Trusts: These trusts are created through a will and take effect upon the death of the settler. • Inter Vivos Trusts: These trusts are created during the settler's lifetime and can become effective immediately or upon the settler's death.

A Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion; Beneficiary has Right to Terminate Trust at Age 21 is a legal document that sets out the terms of an irrevocable trust for a minor child. This type of trust allows the parent or guardian to make gifts to the minor up to the annual gift-tax exclusion limit without the gift being subject to gift taxes. The trust also allows the beneficiary to terminate the trust at age 21. The Trust Agreement will typically include the following elements: • Details of the trust, such as the name, purpose, and duration; • The identity of thsettleror (the person creating the trust) and the trustee (the person responsible for managing the trust); • The beneficiaries of the trust; • The trust property; • The terms of the annual gift-tax exclusion; • The terms of the beneficiary's right to terminate the trust at age 21; and • The terms of any distributions from the trust. There are two main types of Trust Agreement for Minor Qualifying for Annual Gift-Tax Exclusion; Beneficiary has Right to Terminate Trust at Age 21: • Testamentary Trusts: These trusts are created through a will and take effect upon the death of the settler. • Inter Vivos Trusts: These trusts are created during the settler's lifetime and can become effective immediately or upon the settler's death.